Boohoo shares dive following Leicester factory allegations
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Shares in fast fashion retailer Boohoo slumped more than 18 per cent today following allegations of illegally low wages at the firm’s factory in Leicester.
Boohoo shares fell 23 per cent during trading today, after the Sunday Times yesterday reported that workers making clothes for the firm’s Nasty Gal brand were paid as little as £3.50 an hour.
Shares settled slightly towards the end of the day, closing 18.5 per cent down at 315.9p.
The steep slump, which wiped more than a fifth off Boohoo’s market value overnight, comes as the National Crime Agency (NCA) announced it was investigating Leicester’s textiles industry over exploitation allegations. It did not make a specific comment on the Jaswal Fashions factory at the centre of allegations against Boohoo.
An NCA spokesman said: “Within the last few days NCA officers, along with Leicestershire Police and other partner agencies, attended a number of business premises in the Leicester area to assess concerns of modern slavery and human trafficking.”
Home Secretary Priti Patel described the allegations as “truly appalling”.
“I will not tolerate sick criminals forcing innocent people into slave labour and a life of exploitation,” she added.
Boohoo attempted to shrug off the allegations today, saying that its early investigations revealed that Jaswal Fashions was “not a declared supplier” of Boohoo, and that the factory had ceased operations as a garment manufacturer.
“It therefore appears that a different company is using Jaswal’s former premises and we are currently trying to establish the identity of this company.”
Boohoo added that it was taking “immediate action to thoroughly investigate how our garments were in their hands”.
The UK fashion firm, founded in 2006 by British billionaire Mahmud Kamani and Carole Kane, said that it will terminate its dealings with any supplier found in breach of its code of conduct.
“We are grateful to the Sunday Times for highlighting the conditions at Jaswal Fashions, which, if as observed and reported by the undercover reporter, are totally unacceptable and fall woefully short of any standards acceptable in any workplace,” Boohoo said.
Boohoo is by far the biggest company listed on AIM, with a capitalisation of nearly £5bn, eclipsing rival Asos and well-known brands such as Fevertree.
It has faced a slew of accusations about its work practices in recent weeks, after a labour group last week alleged its suppliers had been forcing staff sick with coronavirus to turn up to work.
Labour Behind the Label, a campaign group for workers’ rights, said it had received reports of “workers being forced to come into work while sick with Covid-19, workers wishing to isolate being denied pay, [and] factories operating illegally throughout lockdown”.
Boohoo said it will investigate the allegations.
The group became the subject of short-seller attacks in May this year, after London hedge fund Shadowfall published a 53-page report alleging that the retailer had provided a “misleading impression” of its free cash flow position.
Shadowfall said Boohoo had overstated its free cash flow by 65 per cent — equal to £32.2m. The online retailer said it “strongly refuted” the allegations.